Paytm to Now Levy 2% Fee on Wallet Recharge Using Credit Card
Digital payments firm Paytm on Wednesday announced that it will charge a 2 percent deposit fee from users who top up their Paytm Wallet using credit cards. According to Paytm, this was being done to combat misuse of its zero-fee transfers, explaining that savvy users were rotating their cash through the wallet to earn essentially "free" money in the form of reward points. Paytm said that to ensure that genuine users don't lose money, it will return the 2 percent charge in the form of coupons that can be used on its platform.
Paytm has started levying the fee however, adding money using other payment options like debit cards and net banking would remain free. This may surprise normal users like most of us but for a savvy user, it meant freebies at Paytm's cost," Paytm said in a blog post.
As noted in the post announcing this decision, since November, Paytm has been allowing users to take cash out of the wallet to their bank accounts at no charge. Typically, cashing out has attracted a fee from wallets. At the same time, Paytm and other wallets haven't charged fees for depositing cash into their systems. This meant that credit card users could fill up their Paytm wallets using the card, then transfer that money back to their bank accounts, at no charge. "They were not only getting free loyalty points which effectively is free cash but also getting access to free credit," Paytm noted.
Incidentally, Paytm pays fee to card networks or banks whenever you use any payment instrument like any other online commerce company. Paytm pays a hefty charges when you use your credit card to card networks and issuing banks. If user simply adds money and takes to bank, we lose money. Our revenue model requires users to spend money within our network and we make money from the margins available to us on various products/services we offer.
To avoid the misuse, Paytm "will put two per cent fee (inclusive of taxes) only on adding money to wallet using credit cards", it added. Paytm said it would issue a discount coupon for same amount within 24 hours of adding money using credit cards. Earlier this month, Paytm had said it has blocked transactions through some credit cards and had put a transaction engine in place to detect such attempts.
There are a couple of other caveats listed on the FAQ page. For one, these refund coupons will only be given when the amount you're filling up is more than Rs. 250. If your transaction is lower than that, you will not get a coupon. Also, you will get a fresh coupon every time you top-up Paytm using a credit card, these coupons can not be clubbed, and have to be applied manually and individually. Also, these coupons can only be used in a single transaction. Also, the coupon isn't applied as a discount on the transaction - it gives you an instant cashback to your Paytm wallet.
The coupons can also be used for bill payments, recharges, and so on, as these are not limited to shopping on Paytm Mall. The vouchers will expire on December 31, 2017, but the FAQ mentions that this can be extended on request.
Paytm is applying these charges only on wallet recharges done using credit cards, so if you're using a debit card, net banking, or UPI/ IMPS payments, then you are not affected by this move.
Cheers!!!
Paytm has started levying the fee however, adding money using other payment options like debit cards and net banking would remain free. This may surprise normal users like most of us but for a savvy user, it meant freebies at Paytm's cost," Paytm said in a blog post.
As noted in the post announcing this decision, since November, Paytm has been allowing users to take cash out of the wallet to their bank accounts at no charge. Typically, cashing out has attracted a fee from wallets. At the same time, Paytm and other wallets haven't charged fees for depositing cash into their systems. This meant that credit card users could fill up their Paytm wallets using the card, then transfer that money back to their bank accounts, at no charge. "They were not only getting free loyalty points which effectively is free cash but also getting access to free credit," Paytm noted.
Incidentally, Paytm pays fee to card networks or banks whenever you use any payment instrument like any other online commerce company. Paytm pays a hefty charges when you use your credit card to card networks and issuing banks. If user simply adds money and takes to bank, we lose money. Our revenue model requires users to spend money within our network and we make money from the margins available to us on various products/services we offer.
To avoid the misuse, Paytm "will put two per cent fee (inclusive of taxes) only on adding money to wallet using credit cards", it added. Paytm said it would issue a discount coupon for same amount within 24 hours of adding money using credit cards. Earlier this month, Paytm had said it has blocked transactions through some credit cards and had put a transaction engine in place to detect such attempts.
There are a couple of other caveats listed on the FAQ page. For one, these refund coupons will only be given when the amount you're filling up is more than Rs. 250. If your transaction is lower than that, you will not get a coupon. Also, you will get a fresh coupon every time you top-up Paytm using a credit card, these coupons can not be clubbed, and have to be applied manually and individually. Also, these coupons can only be used in a single transaction. Also, the coupon isn't applied as a discount on the transaction - it gives you an instant cashback to your Paytm wallet.
The coupons can also be used for bill payments, recharges, and so on, as these are not limited to shopping on Paytm Mall. The vouchers will expire on December 31, 2017, but the FAQ mentions that this can be extended on request.
Paytm is applying these charges only on wallet recharges done using credit cards, so if you're using a debit card, net banking, or UPI/ IMPS payments, then you are not affected by this move.
Cheers!!!
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